Real Property Law and Procedure in the EU
Following the establishment of the internal market and the common area of freedom, security and justice, European citizens, businesses and capital have become increasingly mobile. Real estate transactions with cross-border elements have become more frequent, with immovables being acquired for personal use or investment.
Despite this, real property law is to date one of the few legal branches which have remained essentially national, and in which differences among national laws remain greatest. Thus, real property and real securities (mortgages) are defined differently; the registration of real property serves different purposes and requires different forms and procedures.
Moreover, important instruments such as notarial deeds (actes authentiques) are only used in continental Europe, with the effect that their recognition and enforcement under Regulation No. 44/2001 may pose problems in other Member States. Apart from the economically marginal Directive No. 94/47 on time-sharing rights in immovables, the European Union has to date never become active in real property law. However, European legislation in other areas has had several important effects on real estate transactions.
Firstly, many aspects of real estate transactions are protected by the basic freedoms. Thus, with real sureties, the European Court of Justice (ECJ) held in Trummer (C-222/97, 16/3/1999) that a national prohibition of registering mortgages in foreign currencies is unlawful. The financing of real estate investments, which constitutes one of the major businesses of European banks, is protected in cross-border cases by the free circulation of capital.
Even though the internal market for banks was completed in 1 January 1993 with the 2nd Banking Law Directive No. 89/646, cross-border financing of real estate investments is still an exception, which seems to be mainly due to the differences among the national security instruments such as mortgages.
Secondly, European contract law, in particular the directives on doorstep sales, consumer credits and unfair terms, already generates far-reaching, though generally unintended, interferences on real estate transactions. Such interferences have come to the fore in Heininger (C-481/99, 13/12/2001), dealing with the consumer's right to withdraw from a real estate investment arrangement entered into on credit, and the recent submission, by the German Federal High court (BGH, XI ZR 91/99 of 9/4/2002), of a price instalment standard clause contained in a building contract.
Thirdly, and most importantly, the possible adoption of a European Contract Code, as envisaged, though only as a non-binding common reference framework, in the latest Commission Action Plan on a More Coherent European Contract Law of 12 February 2003, would increase European interference on real property law massively. Containing general contract rules to be uniformly monitored by the European Court of Justice, such a codification would need to co-exist with widely different national property law regimes. This juxtaposition would, in turn, leave different regulatory functions to contract law, which may adversely affect its desired uniformity.
In view of the importance of real property law for European citizens, banks and businesses, the existing huge differences and the interferences already caused by European legislation, property law should be studied and assessed systematically, in order to explore the potential for a European co-ordinative and complementary role.
This research project aims to achieve this objective in three steps:
First step
Selected national experts will draft comparative reports of the current legal situations in all Member States and some candidate countries. This study, which will be the first comprehensive European survey in this field, will focus on conveyancing, mortgaging and related questions of land registration and European law influences.
Following the positive experience of the ongoing EUI Tenancy Law Project (co-financed by the 2002 Grotius Programme), the reports will be structured by a questionnaire containing precise questions and cases to be resolved by all reporters according to their national laws (see Annex II).
By resenting precise and specific solutions to representative real property law problems, the national reports will provide legal practitioners with directly operational information.
Second step
The influences of a European Civil Code containing general contract rules will be explored. To this end, each national report will analyse the interface of national real property law rules and European contract law hypothetically, taking the existing draft codes such as the Principles of European Contract Law elaborated by the Lando Commission and the Code Européen des Contracts from the Pavia Academy as reference models.
This analysis will provide an important test case for the feasibility and the desirable scope of a future European Contract Code. In particular, it will show to what extent the objective of unification is frustrated by the task of contract law to complement and accommodate different national real property laws.
Third step
The potential for a European co-ordinative and complementary role in real property law will be explored. This objective is inspired by the open method of governance and its techniques of benchmarking, sharing and spreading of best practices, target-setting and peer review. Moreover, the project of a European mortgage started by academics in the early nineties will tried to be revived.
The project is co-directed by the European University Institute (EUI) and the Deutsches Notarinstitut (DNotI), Würzburg/Germany.
Questionnaire
Austria: Rudolf KAINDL, Wien
Belgium: Valérie WEYTS, Brussels
France: Stéphane GLOCK, La Wantzenau
Finland: Tommi RALLI, EUI and Katja WECKSTRÖM, Turku
Germany: Christian HERTEL and Hartmut WICKE, Wuerzburg
Greece: Eugenia MATTHEOU, Thessaloniki
Hungary: Tamás FEKETE, Budapest
Italy: Giovanni LIOTTA, Turin
Netherlands: Hendrik PLOEGER and Jaap ZEVENBERGEN, Delft
Spain: Pedro GARRIDO CHAMORRO, Madrid
Poland: Piotr SZAFARZ, Warsaw
Portugal: Sandra PASSINHAS, Coimbra and EUI
Scotland: Kenneth REID, Edinburgh
Sweden: Ulf JENSEN, Lund
UK: Peter SPARKES, London
Special Report on the Eurohypothec: Sergio NASSARE AZNAR, Tarragona
Special Report on the Principles of European Contract Law: Oliver REMIEN, Wuerzburg
General Report: Christian HERTEL, Wuerzburg and Christoph SCHMID, EUI
For information contact the scientific coordinator Dr Christoph Schmid: schmid@zerp.uni-bremen.de